Question 3

Dr Daniel is the firm's risk manager. In March 2023, the collapse of Silicon Valley Bank raised

fears of a new financial crisis, like in 2008. Daniel asks you to weigh the risk of Singapore

institutions failing because of a bank run. He shares the below graph, summarising the balance

sheet structure of a typical Singaporean bank.

Liabilities and Equity

Equity

Others

Debt securities

Customer deposits

Bank deposits

8%

6%

9%

73%

Assets

7%

60%

7%

10%

16%

Others

Loans to customers

Loans to banks

Other securities

Central banks and

governments

(a) Infer from this balance sheet graph five (5) sources of liquidity strength available to a

Singaporean bank facing a bank run scenario. Your answer should not exceed two hundred

(200) words (including any cited reference). (15 marks)

(b) Discuss in less than two hundred (200) words (including any cited reference), whether the

'Central banks and governments' asset balances pose a greater liquidity risk for a

Singaporean bank than 'Other securities'. (5 marks)

Daniel presents you with a list of five (5) banking assets. He asks you to rank them in descending

order of liquidity and match them with the correct maturity range. The information is summarized in/nthe table below but is left Unsorted on purpose.

Assets

Revolver loan to a SME

Residential mortgage loan

Power plant project financing

Acquisition bridge loan

Credit card advance

Maturity

ranking

Average

Short

Likeliest maturity

range

15-40 years

7-12 years

6 months-2 years

Longest

Shortest

Long

(c) Re-arrange the table so that the five (5) assets are correctly ranked according to their

maturity ranking from the shortest to the longest and adequately matched with the

corresponding maturity range. (10 marks)

3-18 months

1-3 months